Need To Contribute More to HSA

[Barbisi]

Our first plan was rejected, and we have until June 26 to file an amended plan. (The creditors have until June 19 to file proof of claims.) Part of the reason we were not confirmed was the $300 per month at least we will need for ongoing multiple medical issues, and we were NOT contributing this amount to the HSA already. (To save money before we realized we had no alternative to Chapter 13 regarding the more than $100,000 owed to CC, we had foolishly elected to only pay the minimum to the HSA , not expending the almost $1000 already paid out for PT, multiple specialty doctor office visits,etc. that have already come out of our pockets since January.) If we can start putting $300 into the HSA NOW, it would help us as we need it going forward.

The lawyer insists everything must stay "status quo" until confirmation, but we need to start paying money to HSA and we have already submitted thorough documentation before the first confirmation as to why we need this $300 every month. As I understand it, we have the legal right to contribute a reasonable amount to the HSA every month regardless of our BK.
If we can contribute now , this would remove ONE objection to the confirmation .(the $300)
Must everything really stay STATUS QUO? Do we have to get the trustee's permission or court approval to make this necessary change?
Thanks everyone!
Happy Easter and Passover to all!

[RetiredArmy]

Everything you do, MUST BE APPROVED BY THE TRUSTEE! When you go to your initial meeting, you will have the opportunity to present your situation to the Trustee. They are pretty good at finding out if money is being hidden or used properly. Just go with the flow and have all of your ducks in a row when you talk to your attorney and Trustee in regards to your medical situation. The majority of CH13 are due to medical issues and you definitely have a viable claim for your needs.

[Barbisi]

Thank you, Retired Army!
We already had our initial meeting with the trustee and part of their objection and rejection of our plan was the $300 we clearly showed we need to pay ongoing and future medical bills. If we contribute now to the HSA we can eliminate the disputed amount on a certain line of our petition when we refile on June 26. If we start contributing now we will know better how much take home pay we will have after the HSA is deducted and can see then if we can pay what they demand or if we will have to testify before the judge!

[RetiredArmy]

Are you preparing your own Chapter 13 "PRO SE"? or do you have an attorney? For your current situation your attorney is well schooled in these specific situations in regards to the HSA and Education Savings accounts. This is why it is usually in the best interest of the debtor to hire an attorney.

[Barbisi]

Hi, Retired Army!
Sir, I think you haven't understood since my first post .We already filed in February and had our first confirmation hearing in early April and our plan was rejected! We now have until June 26 to file an amended plan! This is why we are trying to increase our contributions to the HSA now! And yes , we do have a lawyer - he just doesn't explain things as I would like!

[Zombie13]

Hi RetiredArmy.
Barbisi's husband here. one of the trustee's objections to the original plan was a $300 monthly medical expense, out of pocket. Their reason was, 'we have an HSA, so why are we claiming an out of pocket medical expense?'. Well, the reason is, we were previously using a medical FSA (Flexible Spending Account). The terms between an FSA and HSA are different - with an FSA, the funds must be used during the calendar year. After March of the following year, all remaining funds are abandoned. My company dropped the FSA plan recently, so we had to switch to an HSA; we had no control over that. The reasoning was due to excessive administrative costs associated with the FSA plan (associated with the Affordable Health Care Act is their reason).

At present we are not contributing much to the HSA; hence, the $300 out of pocket expense. If we were to put the $300 into the HSA, then we could zero out that line item on our plan form, resolving the trustee's objection. This does cause a reduction in net income, since contributions to the HSA are pre-tax. This results in a reduced annual tax burden. In my mind, this change would not impact our monthly plan payment. We won't say, 'oh.... now we have $300 less per month to pay the trustee'. Rather, we are setting the funds aside to pay for medical expenses pre-tax, and that's it. We have provided a vast amount of documentation supporting our argument - letters from doctors, dentists, chiropractors, pharmaceutical, etc. to demonstrate we aren't making it up just to get extra wiggle room. Rather, we are not going to spend the next 5 years hobbling around on a cane just to get by and make the trustee happy.

Thanks!

[LadyInTheRed]

Increasing your FSA contribution will not help get your plan confirmed. You need to document your medical expenses, whether they are paid through the FSA or out of pocket. If you list a $300 FSA contribution, but can't show $300 in expenses, the trustee will continue to object to your plan. It sounds like you have provided the documentation. If your attorney says not to change the contribution, don't. The tax savings you mention could be the reason he doesn't want you to do that. If your trustee is anything like mine, once the plan is confirmed, you can make the change.

[Zombie13]

Thank you LadyInTheRed. Yes I concur.

Yes, we have provided real evidence supporting our claim of medical expenses.

The attorney is going to discuss the HSA with the trustee to ensure moving funds into the HSA will not cause any issues. So we will hear back from the attorney regarding that discussion.

We reasoned, we should discuss this with the attorney now, vs. after June 19. We have til June 26 to submit a revised plan. That is a one week window. Since we have ample time between now and June 26, it's best to have the conversation now vs. later. We were under the impression that if there is an objection, we need to find a way to resolve it, and include it in the revised plan; hence the idea to move the $300 from out of pocket medical expenses over to the HSA. We presented that idea to the attorney, and he replied per Barbisi's original post. So, now we wait to hear what the trustee has to say.

And I agree - once the plan is confirmed, we can contribute to the HSA, as long as we meet obligations: Chapter 13 payment, mortgage, car, utilities, food, etc. The amount we contribute may depend on the revised Chapter 13 payment. The payment may increase, or it may remain the same. This depends on whether any additional creditors submit claims before June 19.

Thanks

[Barbisi]

Thank you , Lady in the Red and Zombie 13.
This situation is one of many reasons why I flinch every time I read some one on here gush about how marvelous a budget teacher these chapter 13 plans are and how you learn to cut everything out the trustee expects you to do with out - in my case ongoing PT for posterior tibial tendinitis, decently made orthotics ($400+) to correct talo-tarsal syndrome (the podiatrist even suggested foot surgery to correct the misaligned feet) and functional flat feet, necessary at least twice monthly chiropractic adjustments for a rotated pelvis and significant SI joint subluxations, medical (not luxury), massages, growing fibroids that require birth control pills to prevent a hysterectomy (Yasmin $290 for 3 packs (Caremark home delivery), a chipped front tooth ($1200) that can worsen at any time and requires a cap which the insurance declares is only cosmetic and thus not covered even though I can't eat apples, ribs etc. with the tooth to prevent it breaking any more, as well as costly ultrasounds, blood tests, etc. And these amounts doesn't include any thing medical for my husband like checkups, glasses(which he needs now!), chiropractic,etc.
It definitely sounds like the trustee is going to rook us out of every cent before we are allowed to contribute to our HSA the disputed amount , meaning he wants $600 + more each month. (other contested items include $50 more for 4 cats, $170 for occupational classes, headshots,etc. and $100 for us both to regularly exercise at a cheaper gym to lose weight.)
and maintain a healthy weight.
Of course it goes with out saying we will never take any kind of vacation while in this chapter 13 or get lavish spa treatments, or go out to 4 star restaurants, attend the opera or any concerts (Funny how we never got to do any of these things when we had MDI ) and I will have for go pursuing my acting , voice over and singing career until we have paid as much of our debt as possible ,but eliminating needed medical procedures and care for 5 years seems pretty punitive to me!
Sorry if I sound negative but I thought contributing to the HSA was a right not a privilege! If only we had put this $300 in the HSA before January the trustee couldn't have taken our $300 away -and now it's too late!

[LadyInTheRed]

You should not have to eliminate necessary medical expenses. That is not the kind of lesson people are talking about when they say Chap 13 teaches you to budget.
If you can document the expenses as necessary, your plan should be confirmed. You do not have to amend the plan just because the trustee objects. The trustee does not get the last word. If you can document the medical expenses, he should drop that objection. If he still objects and you don't think he has valid grounds on which to base is objection, you can let the judge decide.

Many trustees won't allow pet care expenses. In fact, there was one BKForum member whose trustee not only objected to the expenses, but said they had to list their dogs as an asset! I think my attorney lumped my pet care expenses into my food expenses.

You do have to make some sacrifices in exchange for getting your debt discharged. Gym fees may be okay if you don't have additional spending for recreation and entertainment. But, I don't think you can call a gym membership a medical necessity. You can get regular exercise without going to a gym. A good rule of thumb is that if you can't pay for it with an HSA, it probably cannot be considered a medical expenses for BK either. Unless you are already earning a living with the acting, voice over and signing, those expenses aren't likely to be allowed. That is something else that could be included under recreation and entertainment. But, don't count on more than $100 per person for recreation and entertainment.

[Zombie13]

Thanks LadyInTheRed (Barbisi's husband here ).
The attorney acknowledged he has already discussed our medical situation and documentation with the trustee. They will have a conversation regarding the HSA and the attorney will report back to us.
The attorney stated the trustee may balk at the additional funds marked for pet expenses; the limit appears to be $100, we listed $150. We do have 3 little (well not so little anymore) kitty zombies that have voracious appetites; they work together as a team. The middle one is the boss; she tells the big one to knock the bag off the shelf, then instructs the little one with the sharp teeth to gnaw a hole in the bag. Then it's fiesta time!

Regarding the remaining expenses in question - gym, etc. the attorney stated (after a conversation with the trustee), we need to wait til June 19 (creditor claim deadline) to evaluate how much increase (if any) is required to the plan payments. This means the 'range of rejection' for these expenses can range from 0 - 100% in our case. We just have to wait til June 19. I think it's time to ask our trusty, all-knowing, Magic 8-Ball.

[LadyInTheRed]

The 8 Ball knows all. It sounds like either you are close to 100% plan or your trustee likes to shoot for a certain percentage for unsecured creditors.

Sounds like you have your hands full with those kitties. I am glad to hear your trustee will allow at least something in the budget for them. After all, they are members of your family. One of our kitties has been missing for a week. He's a big cuddly boy to us, but a bully to our little girl kitty who we refer to as our permanent kitten. Now that he is gone, she is starting to venture from her one safe room out to the rest of the house. It's very bitter sweet.

[Barbisi]

Sorry about your missing kitty, Lady in the Red! Many years ago we lost a beautiful orange and white Maine Coon, Cynnebar who accidently got out through a torn screen and never returned.His equally ravishing Brown tabby sister, Kabuki remained our darling doll daughter for almost twenty more years, expiring only in October 2016 (almost 6 months to the day after my beloved Mama.) I hope he returns soon! While we lived in Virginia, Our Irish Pirate Pet Pig Oriental Shorthair/Aby mix ,Pikki Pikkar got out but thankfully returned 3 days later, none the worse for wear. In fact,he lived another 8 years after that, and died at 18 and a 1/2 in 2015!
The little one is a gorgeous black Turkish Angora "Rat," Gojira (Godzilla) the big one is a handsome black and white Norwegian Forest mix, Mochi and the middle one is a lovely grey-brown /white Ragdoll mix, Shiori! (I love Japanese names and culture and speak three languages. )
At present we are only paying about 13% of the $134,000 total we owe, which we realize is probably too little, but there is no way we can pay back 100% of that amount at present. (If we could, I would gladly be in a CCCS- style plan. (no trustee, no judge, no court,etc) The uncertainty of our final payment plan, coupled with the growing medical bills is driving me "folle"!

[Barbisi]

Recently we had to pay $650 for Mochi (eye conjevitus) and Shiori (fleshy growth on two of her teeth preventing eating and causing much discomfort, something which our trusted vet had never seen before and which required anesthesia and lab pathology - luckily negative!) Fortunately, and maybe because our payment is still lower than the trustee wants, we were able to take our babies to their doctor and get prompt treatment. Of course we have been saving a la the much touted chapter 13 budget teacher as well but having a little wiggle room for this emergency virtually ensured both kittens could get the care they deserved and needed.My fear over the next five years is our financial ability to continue to provide them with needed medical care, not just food! Just another reason to be apprehensive! I hope we can find a way to survive all these challenges and the uncertain future that lies ahead.

[Zombie13]

LadyInTheRed, I do hope your big cuddly kitty comes back home!
I concur, it does appear the trustee is shooting for a higher percentage of unsecured creditors. All we can do at this time is wait til June 19 to hear the results, then proceed from there.